WTI Crude to surge in 2019?

Some analysts say that electric cars oversold gasoline-based engines in the first quarter of 2019 in some regions. Some WTI Crude bears mention that the black gold price might lose its primary growth driver - the consumption. Meantime, the bulls don’t care. WTI Crude price kept surging in 2019, breaking several critical technical resistance levels, and adding another 5% to its value. The total growth is nearing to 50%, counting from the bottom noticed this year. Will the uptrend continue or should we expect a deep retracement or even a bearish reversal in the nearest future? We’ll try to answer this million-dollar question in this article.

Although Crude oil is a commodity and the supply/demand issue traditionally determines the price, it’s also a financial instrument. Otherwise, why would WTI Crude continue climbing North after such a stronger-than-expected US inventories report as per last week? Oil stock jumped to more than 7 million barrels last week, while experts were forecasting a decline of -0.4 million barrels. Some analysts pointed troubles in Venezuela supplies but let’s face the cruel truth, the country does not have a significant impact on global oil output.

Another diverging factor is that the US shale production keeps growing nine months in a row, while the total output exceeded Russian output volume. However, such steady growth in global supply failed to add selling pressure on oil prices. US President Donald Trump often Twits about oil prices, trying to impose verbal interventions having in mind political reasons. Oil speculators ignore that background. Saudi Arabia made the announced output cut, but the OPEC+ agreement does not have meaningful achievements in the front of arranging deals to continue limiting oil production. OPEC members are interested in enlarging the exports volume and increasing the total revenue. So what’s happening with WTI Crude and Brent prices?

The answer is simple: risk appetite weighs on fear/greed barometer, which keeps shifting the arrow to the left side throughout the whole year 2019. The Federal Reserve shook out the fixed-income market by putting the tightening cycle on hold; global investors kept fuelling carry-trade capital flows, boosting emerging markets; US equities continued the bullish rally, nearing to all-time highs on long-term charts. WTI Crude oil is used as a financial instrument, a subject of lucrative mid-term investment aimed to bring much higher profits than government debt, low-yield bonds and securities. Global speculators continue investing in oil future contracts, options and derivative, even though such a strong demand does not have a fundamental background.

Technically speaking, the price of oil is in a continuous uptrend since it found the bottom and completed the reversal pattern in January 2019. It was not a massive surprise for technical analysts to watch the price of oil climbing towards $60 per barrel as a psychological round-figure target. However, what happened this past week, was fascinating and critical for the long-term technical analysis. The weekly chart below shows that WTI Crude breached 89-weeks simple moving average for the first time since the plunge in October 2018. SMA89 and EMA34 crossed each other, signalling the bullish confirmation. An ascending resistance line, which worked as the support during the uptrend started in February 2016, does not hold the bulls anymore as weekly prices are clearly above it. As a result, a test of the local top of $74.26 is very likely, and it’s just a matter of time when the bulls would get there. It’s time to place your bets, ladies and gentlemen.

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